diff --git a/internal/provider/branch_resource.go b/internal/provider/branch_resource.go
index 604f1355..0630342a 100644
--- a/internal/provider/branch_resource.go
+++ b/internal/provider/branch_resource.go
@@ -189,17 +189,30 @@ func (r *branchResource) Create(ctx context.Context, req resource.CreateRequest,
 		return
 	}
 
-	// After branch is ready, check if we need to promote it to a production branch
-	if !data.Production.IsNull() && data.Production.ValueBool() {
-		res, err := r.client.PromoteBranch(ctx, org.ValueString(), database.ValueString(), name.ValueString())
-		if err != nil {
-			resp.Diagnostics.AddError(
-				"Unable to promote branch during creation",
-				fmt.Sprintf("Branch %s could not be promoted to production: %s", name.ValueString(), err),
-			)
-			return
+	// After the branch is ready, check if we need to promote or demote it
+	if !data.Production.IsNull() {
+		if !branch.Production && data.Production.ValueBool() {
+			res, err := r.client.PromoteBranch(ctx, org.ValueString(), database.ValueString(), name.ValueString())
+			if err != nil {
+				resp.Diagnostics.AddError(
+					"Unable to promote branch during creation",
+					fmt.Sprintf("Branch %s could not be promoted to production: %s", name.ValueString(), err),
+				)
+				return
+			}
+			branch = res.Branch
+		}
+		if branch.Production && !data.Production.ValueBool() {
+			res, err := r.client.DemoteBranch(ctx, org.ValueString(), database.ValueString(), name.ValueString())
+			if err != nil {
+				resp.Diagnostics.AddError(
+					"Unable to demote branch during creation",
+					fmt.Sprintf("Branch %s could not be demoted to production: %s", name.ValueString(), err),
+				)
+				return
+			}
+			branch = res.Branch
 		}
-		branch = res.Branch
 	}
 
 	data = branchResourceFromClient(ctx, &branch, data.Organization, data.Database, data.SeedData, resp.Diagnostics)
diff --git a/internal/provider/branch_resource_test.go b/internal/provider/branch_resource_test.go
index 0a9a8ce1..4da2906f 100644
--- a/internal/provider/branch_resource_test.go
+++ b/internal/provider/branch_resource_test.go
@@ -59,6 +59,56 @@ func TestAccBranchResource(t *testing.T) {
 	})
 }
 
+// TestAccBranchResource_WithSeedData tests the creation of a branch with the seed data.
+func TestAccBranchResource_SeedData(t *testing.T) {
+	dbName := acctest.RandomWithPrefix("testacc-branch-db")
+	branchName := acctest.RandomWithPrefix("branch")
+
+	resource.ParallelTest(t, resource.TestCase{
+		PreCheck:                 func() { testAccPreCheck(t) },
+		ProtoV6ProviderFactories: testAccProtoV6ProviderFactories,
+		Steps: []resource.TestStep{
+			// Initial creation with required fields
+			{
+				Config: testAccBranchResourceConfigTemplate(map[string]string{
+					"organization":  testAccOrg,
+					"database":      dbName,
+					"name":          branchName,
+					"parent_branch": "main",
+					"seed_data":     "last_successful_backup",
+				}),
+				Check: resource.ComposeAggregateTestCheckFunc(
+					resource.TestCheckResourceAttr("planetscale_branch.test", "name", branchName),
+					resource.TestCheckResourceAttr("planetscale_branch.test", "parent_branch", "main"),
+					resource.TestCheckResourceAttr("planetscale_branch.test", "production", "true"),
+				),
+			},
+			// ImportState testing
+			{
+				ResourceName:            "planetscale_branch.test",
+				ImportStateId:           fmt.Sprintf("%s,%s,%s", testAccOrg, dbName, branchName),
+				ImportState:             true,
+				ImportStateVerify:       true,
+				ImportStateVerifyIgnore: []string{"updated_at", "schema_last_updated_at"},
+			},
+			// Update in-place to development branch
+			{
+				Config: testAccBranchResourceConfigTemplate(map[string]string{
+					"organization":  testAccOrg,
+					"database":      dbName,
+					"name":          branchName,
+					"parent_branch": "main",
+					"production":    "false",
+				}),
+				ConfigPlanChecks: checkExpectUpdate("planetscale_branch.test"),
+				Check: resource.ComposeAggregateTestCheckFunc(
+					resource.TestCheckResourceAttr("planetscale_branch.test", "production", "false"),
+				),
+			},
+		},
+	})
+}
+
 // TestAccBranchResource_ProductionCreate tests the creation of a branch with
 // the production flag set to true.
 func TestAccBranchResource_ProductionCreate(t *testing.T) {
@@ -149,6 +199,7 @@ resource "planetscale_branch" "test" {
     name          = "{{.name}}"
     parent_branch = "{{.parent_branch}}"
     {{if .production}}production = {{.production}}{{end}}
+    {{if .seed_data}}seed_data = "{{.seed_data}}"{{end}}
 }
 `
 	t := template.Must(template.New("config").Parse(tmpl))